On December 21 2016 the Federal Ministry of Finance released details of a new whistleblowing programme (for further details please see "Federal Ministry of Finance introduces new whistleblowing initiative"). The programme aims to enable the ministry, where it is in the public interest, to:
- obtain information concerning:
- the violation of financial regulations;
- the mismanagement of public funds and assets;
- financial malpractice or fraud; and
- theft; and
- recover such funds and assets.
Under the programme, persons with relevant information can make anonymous reports in a number of ways and be rewarded for doing so.
Between February and April 2017, federal ministers reported that the new programme had resulted in the recovery of at least N73 billion (approximately $238 million), and it appeared that the scheme was set to be a success. One of the most significant recoveries made as a result of information provided to the authorities was that of approximately $43 million in cash, which was found in April 2017 in an apartment beneficially owned by the wife of the head of a government intelligence agency (for further details please see "High court issues non-conviction-based forfeiture orders"). The official was dismissed in November 2017 and there have been media reports of a stand-off between the Economic and Financial Crimes Commission (EFCC) – which is the agency charged with the enforcement of economic crimes – and the State Security Service when the EFCC sought to arrest the official.
This particular recovery continues to surprise. On November 9 2017 the head of the EFCC was reported to have told the seventh session of the conference of the state parties to the United Nations Convention against Corruption in Vienna that the man who had reported the presence of the $43 million in the apartment had become a millionaire and was receiving counselling on "how to make good use of the money and also the security implications". The following day, the EFCC issued a statement seeking to clarify that the statement attributed to the head of the agency was not intended to be a claim that the informant had been paid a reward in accordance with the whistleblowing programme. The statement went on to say that the EFCC was not the body with direct responsibility for paying such a reward. This clarification had become necessary as a result of the denial of a lawyer, who was reportedly acting for the informant, that the latter had received any payment.
The situation became even more confusing when the media reported that:
- more than one informant had laid claim to the reward; and
- an action had been filed in court to prevent the payment of a reward to any other person.
Simultaneously, the individual whose lawyer had denied receipt of any reward was reported to be in dispute with the government over the amount of reward being offered, as it was less than 5%. He was reportedly unwilling to accept any sum equivalent to or less than 5% of the recovered amount. However, the minister of finance has allegedly stated that:
- the government will pay a reward only to persons with whom it has signed an agreement; and
- any payment made will be net of income tax.
When the programme was announced, an issue was identified with regard to the lack of clarity around how rewards will be calculated. Both the policy statement and the frequently asked questions on the whistleblower portal state that persons who are "responsible for providing information that directly leads to the voluntary return of public funds or assets may be entitled to anywhere between 2.5%-5% of the amount recovered". There is no clarity as to the mechanism that determines whether the reward is to be calculated as:
- 2.5% of the recovered amount;
- 5% of the recovered amount; or
- somewhere in between.
One of the claimants to the reward in respect of the $43 million recovery is demanding at least 5% of the recovered amount. The government has stated that any payment that it makes will be based on the agreement entered into with the whistleblower. If the issue proceeds to litigation, there may be some indication as to how the programme is actually being implemented.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.
For further information on this topic please contact Babajide Oladipo Ogundipe at Sofunde Osakwe Ogundipe & Belgore by telephone (+234 1 462 2502) or email (firstname.lastname@example.org). The Sofunde Osakwe Ogundipe & Belgore website can be accessed at www.sooblaw.com.